The Hindu : Asian Paints to buy major stake in Egyptian unit

Online edition of India's National Newspaper
Wednesday, Aug 28, 2002

Business

Business

Asian Paints to buy major stake in Egyptian unit

By Our Staff Correspondent

MUMBAI AUG. 27. Asian Paints (India) Ltd. (APIL) has announced that it will acquire a controlling stake in SCIB Chemical of Egypt. The company is among the five largest paint companies in Egypt.

APIL has entered into an agreement with the shareholders of SCIB Chemical to purchase 60 per cent of the paid up capital of the company subject to due diligence. The proposed investment amounts to about Rs. 24.50 crores ($5 million) and will be made through the wholly owned subsidiary based in Mauritius. The balance 40 per cent will be held by the existing promoters.

APIL has established nine joint venture units in Fiji, Tonga, Solomon Islands, Vanuatu, Australia, Nepal, Sri Lanka, Oman and Mauritius. It is the market leader in six countries including India.

Commenting on the acquisition, Ashwin Dani, Vice Chairman and Managing Director, APIL, said, "In line with our vision to expand our operations in the emerging markets, the Egyptian paint market was given high priority as it is a stable economy.

SCIB Chemical is an excellent vehicle to enter the market as the company complements Asian Paints in its operations and offers numerous opportunities to provide value to the Egyptian consumer.''

Further, Mr. Dani said, "Asian Paints has been impressed with the brand equity of the company as well as the promoters. We feel that there is great opportunity to build on this equity and thus increase market share of the company in the ensuing years. Our effort will be to provide value added products and services with the entire range of decorative coatings to the consumer.''

Ali Moussa, President, SCIB Chemical said, "Considering the expertise of Asian Paints, we are confident that SCIB Chemical can derive major synergies from this association and will consolidate its position in the Egyptian paint market. He further added. "We believe Asian Paints will add greater value to SCIB Chemical especially in the retail sales segment. Asian Paints' wide product range, formulations, knowhow and purchasing power will contribute to increasing the overall profitability of the company.''

SCIB Chemical has a modern plant in the city of `6th of October' with a capacity of 25,000 tonnes. The plant has a tax holiday till the year 2007. The company has a network of 1,500 paint traders and dealers and was the first to introduce textured paints in Egypt and the first to open company owned paint showrooms with computerised tinting machines.

The Egyptian paint market is estimated to be around $150 million (Rs. 750 crores) selling around 1.40 lakh tonnes. The reform process initiated in the1990s aid the sector that has seen good growth. Other major players in Egpyt are Pachin, Sipes and Jotun.

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